UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
|
(Address of principal executive offices) |
(Zip code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
Trading symbol |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
|
|
|
|
☑ |
Smaller reporting company |
||
|
|
|
|
|
Emerging growth company |
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The registrant had
LM FUNDING AMERICA, INC.
TABLE OF CONTENTS
|
|
Page |
|
|
|
PART I. |
3 |
|
|
|
|
Item 1. |
3 |
|
|
|
|
|
3 |
|
|
|
|
|
4 |
|
|
|
|
|
5 |
|
|
|
|
|
6 |
|
|
7 |
|
|
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
|
|
|
Item 3. |
35 |
|
|
|
|
Item 4. |
35 |
|
|
|
|
PART II. |
|
|
|
|
|
Item 1. |
37 |
|
|
|
|
Item 1A. |
37 |
|
|
|
|
Item 2. |
37 |
|
|
|
|
Item 3. |
38 |
|
|
|
|
Item 4. |
38 |
|
|
|
|
Item 5. |
38 |
|
|
|
|
Item 6. |
39 |
|
|
|
|
40 |
||
2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LM Funding America, Inc. and Subsidiaries Consolidated Balance Sheets
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Cash |
|
$ |
|
|
$ |
|
||
Digital Assets (Note 2) |
|
|
|
|
|
|
||
Finance receivables |
|
|
|
|
|
|
||
Marketable securities (Note 5) |
|
|
|
|
|
|
||
Notes receivable from Seastar Medical Holding Corporation (Note 5) |
|
|
|
|
|
|
||
Less: Allowance for credit loss reserve on notes receivable from Seastar Medical Holding Corporation (Note 5) |
|
|
( |
) |
|
|
- |
|
Notes receivable from Seastar Medical Holding Corporation, net |
|
|
|
|
|
|
||
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Income tax receivable |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Fixed assets, net (Note 3) |
|
|
|
|
|
|
||
Deposits on mining equipment (Note 4) |
|
|
|
|
|
|
||
Hosting services deposits (Note 4) |
|
|
|
|
|
|
||
Real estate assets owned |
|
|
|
|
|
|
||
Long-term investments - debt security (Note 5) |
|
|
- |
|
|
|
|
|
Less: Allowance for losses on debt security (Note 5) |
|
|
- |
|
|
|
( |
) |
Long-term investments - debt security, net (Note 5) |
|
|
- |
|
|
|
|
|
Long-term investments - equity securities (Note 5) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Symbiont intangible assets, net (Note 11) |
|
|
|
|
|
- |
|
|
Operating lease - right of use assets (Note 8) |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Long-term assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Liabilities and stockholders' equity |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Note payable - short-term (Note 6) |
|
|
|
|
|
|
||
(Note 7) |
|
|
|
|
|
|
||
Current portion of lease liability (Note 8) |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Lease liability - net of current portion (Note 8) |
|
|
|
|
|
|
||
Long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Stockholders' equity (Note 9) |
|
|
|
|
|
|
||
Preferred stock, par value $ |
|
|
|
|
|
|
||
Common stock, par value $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total LM Funding America stockholders' equity |
|
|
|
|
|
|
||
Non-controlling interest |
|
|
( |
) |
|
|
|
|
Total stockholders' equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
LM Funding America, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Digital mining revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Specialty finance revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Digital mining cost of revenues (exclusive of depreciation and amortization shown below) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Staff costs and payroll |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Settlement costs with associations |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate management and disposal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collection costs |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Impairment loss on mined digital assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gain on sale of mined digital assets |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Other operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Realized gain (loss) on securities |
|
|
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Realized gain on convertible debt securities |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Unrealized gain (loss) on marketable securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Impairment loss on hosting deposits |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Impairment loss on Symbiont assets |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Unrealized gain (loss) on investment and equity securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Impairment loss on digital assets |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Realized gain on sale of purchased digital assets |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Digital assets other income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Other income - coupon sales |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Credit loss on Seastar Medical Holding Corporation notes receivable |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Gain on adjustment of note receivable allowance |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Other income - finance revenue |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Dividend income |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net Loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Less: loss (income) attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net loss attributable to LM Funding America Inc. |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic loss per common share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted loss per common share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
LM Funding America, Inc. and Subsidiaries Consolidated Statements of Cash Flows
(unaudited)
|
|
Nine Months ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net income (loss) to net cash used in operating activities |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Noncash lease expense |
|
|
|
|
|
|
||
Stock compensation |
|
|
|
|
|
|
||
Stock option expense |
|
|
|
|
|
|
||
Accrued investment income |
|
|
( |
) |
|
|
( |
) |
Impairment loss on digital assets |
|
|
|
|
|
|
||
Impairment loss on hosting deposits |
|
|
|
|
|
- |
|
|
Impairment loss on Symbiont assets |
|
|
|
|
|
- |
|
|
Unrealized loss (gain) on marketable securities |
|
|
( |
) |
|
|
|
|
Unrealized loss (gain) on investment and equity securities |
|
|
|
|
|
( |
) |
|
Realized loss (gain) on securities |
|
|
( |
) |
|
|
|
|
Realized gain on convertible note receivable |
|
|
- |
|
|
|
( |
) |
Realized gain on sale of digital assets |
|
|
( |
) |
|
|
- |
|
Proceeds from securities |
|
|
|
|
|
|
||
Convertible debt and interest converted into marketable securities |
|
|
- |
|
|
|
|
|
Investments in marketable securities |
|
|
( |
) |
|
|
( |
) |
Credit loss on Seastar Medical Holding Corporation notes receivable |
|
|
|
|
|
- |
|
|
Reversal of allowance loss on debt security |
|
|
( |
) |
|
|
- |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Prepaid expenses and other assets |
|
|
( |
) |
|
|
|
|
Hosting deposits |
|
|
( |
) |
|
|
- |
|
Repayments to related party |
|
|
( |
) |
|
|
( |
) |
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Mining of digital assets |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of digital assets |
|
|
|
|
|
- |
|
|
Lease liability payments |
|
|
( |
) |
|
|
( |
) |
Deferred taxes and taxes payable |
|
|
- |
|
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Net collections of finance receivables - original product |
|
|
( |
) |
|
|
|
|
Net collections of finance receivables - special product |
|
|
|
|
|
( |
) |
|
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Investment in note receivable |
|
|
( |
) |
|
|
( |
) |
Investment in note receivable - related party |
|
|
- |
|
|
|
( |
) |
Collection of note receivable |
|
|
|
|
|
- |
|
|
Investment in digital assets |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of purchased digital assets |
|
|
|
|
|
- |
|
|
Symbiont asset acquisition |
|
|
( |
) |
|
|
- |
|
Deposits for mining equipment |
|
|
- |
|
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Insurance financing repayments |
|
|
( |
) |
|
|
( |
) |
Insurance financing |
|
|
|
|
|
- |
|
|
Issue costs from the issuance of common stock |
|
|
( |
) |
|
|
- |
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
NET DECREASE IN CASH |
|
|
( |
) |
|
|
( |
) |
CASH - BEGINNING OF PERIOD |
|
|
|
|
|
|
||
CASH - END OF PERIOD |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
||
ROU assets and operating lease obligation recognized |
|
$ |
|
|
$ |
|
||
Reclassification of mining equipment deposit to fixed assets, net |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
- |
|
|
$ |
- |
|
Cash paid for taxes |
|
$ |
- |
|
|
$ |
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
LM Funding America, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Nine Months Ended September 30, 2023 and 2022
(unaudited)
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Additional paid-in capital |
|
|
Accumulated Deficit |
|
|
Non-Controlling Interest |
|
|
Total Equity |
|
||||||
Balance - December 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock issued for services |
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Stock compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock option expense |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance - March 31, 2022 |
|
|
|
|
$ |
|||||||||||||||||||